Cryptocurrency is the latest step in money evolution and it is the latest in the class of financial assets. The framework for managing, storing, and trading cryptocurrencies don’t have a generally accepted standard yet and there are still a lot of loopholes that cybercriminals have continued to exploit. The cryptocurrency market has a market capitalization of over two trillion dollars and cybercriminals cannot ignore a large pool of liquidity like this one. Furthermore, the private and untraceable nature of cryptocurrency also makes them a top target for cybercrimes. In this article, we want to discuss how to identify cryptocurrency scams.
What are the different types of cryptocurrency scams?
Defi Rug pulling
Defi Rug pull happens to be the most popular and the most ‘lucrative’ form of cryptocurrency scams. It is also hard to recognize because it mostly presents itself as an authentic project. A rug pull in the cryptocurrency community happens when developers and startups abandon a crypto project and cart away investors’ funds. Rug pulling is common with cryptocurrencies listed in the Defi systems. This refers to those crypto projects launched on decentralized exchanges. Centralized exchanges are required to perform extensive investigation and documentation before listing any cryptocurrency on their platforms and it is, therefore, harder to carry out a rug pull on them. Decentralized exchanges are however not audited and investors can decide to close down a project irrespective of liquidity.
It is safe to say that every adult knows about Ponzi schemes. A lot of Ponzi schemes have been organized and carried out successfully over the years and it is only expected that a lucrative and private network like cryptocurrency will attract Ponzi scheme pushers. Ponzi schemes in cryptocurrency are more popular with established currencies. For example, a Ponzi scheme can offer you Ethereum if you get newer investors to invest and buy Ethereum from their website if mobile application. The old investors are paid referral commissions from the new investor’s funds. There are also incentives for reinvesting on the platform and assured high-interest rates are always offered in this regard. This continues and on like a pyramid until the last set of investors have deposited funds and then the platform experiences a technical issue and shuts down.
You can avoid this situation by steering clear of any cryptocurrency platform or website that offers you interest in investing or referring new investors to its platform. They are bound to crash and investors’ money is usually lost forever. Rather, you can use more reliable and trusted platforms like Bitcoin Loophole. With them, you can be rest assured that your money is in safe hands.
Parody websites (also known as imposter websites) are quite common today. These imposter websites are built by fraudulent websites to get the private keys to your wallet. Some of these websites are decentralized exchange listing a couple of sol cryptocurrencies. However, there are a couple of parody websites that clone them. At first glance, it seems like they are the same website but the first one has two l’s while the second one has three. If you also click on the website, you would find the same thing and you might not know you are being scammed until you have put in your funds. Be sure you always verify websites before inputting any private keys or sending your funds to the platforms. There are a lot of parody websites impersonating the real websites and some of them go as far as placing google ads to make them seem more believable.
There will always be people who strive for what they want the right way and there will always be people who want to steal. You must protect yourself against thieves by carrying out due diligence before giving out your money or your private information on any platform.